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Reid’s debt limit plan may be the best bet to avoid default

The $2.7 trillion debt limit plan proposed by Senate Majority Leader Harry Reid may offer the best bet for United States to avoid default when the Treasury runs out of money on Aug. 2.

According to an analysis by the non-partisan Congressional Budget Office, Reid’s plan will reduce the federal deficit by $2.2 trillion between 2012 and 2021 while calling for a $2.7 trillion debt limit increase.

“We’ve given the Republicans what they say they wanted. Now all they have to do is say yes,” said Reid (D-NV). “This program does not take one penny out of Social Security, Medicare, and Medicaid; it doesn’t raise taxes. Can’t the Republicans see that’s what they’ve been asking for and we’re willing to give it to them?”

A competing proposal by House Speaker John Boehner (R-OH) would approve a temporary 6-month debt limit increase while seeking only $850 billion in budget cuts over 10 years. Boehner’s proposal provoked a serious backlash from members of his caucus, who complained that the cuts didn’t go deep enough, forcing him to postpone today’s vote and rewrite the legislation with less than a week before the Aug. 2 deadline.

Reid has criticized Boehner’s plan as “untenable” and hinted that any short-term compromise would create an unstable political and financial environment that would lead to the credit agencies to downgrade U.S. credit rating.

“The Speaker’s plan is on life support. It’s time for him to pull the plug,” said Sen. Chuck Schumer (D-NY). “We need to move on to other plans that actually have a chance of passing.”

“If the Republicans can’t say yes to this, it means they’re interested in defaulting on our debt, which will stop Social Security checks from going out, veterans getting their benefits, soldiers in the field not being paid, and in fact shut down government,” Reid said.